The FTSE 100 rose in early trade on Wednesday as relief from the Middle Eastern ceasefire lasted for two days, but profits were small and sold quickly by traders.
London’s main index had fallen 0.1% as oil prices recovered after a sharp loss yesterday.
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Though sentiment was supported by the Iran-Israel ceasefire, there was still a cautious tone to trade in London as the FTSE 100 could not recover to the 8,900-recorded level recorded earlier this month.
The early rallies on the FTSE 100 looked less convincing, and profits changed to losses as the session progressed.
The near risk of a surge in oil prices is crushed, but the world still faces the risks of Donald Trump’s tariffs and the looming edge of a 90-day suspension on tariffs. Many countries have not yet arranged trade transactions.
Interest rates re-enter the story after Federal Reserve Chairman Powell suggested that there was no reason to cut interest rates in July.
A careful approach to inventory was demonstrated on Wednesday by a nearly 50/50 split of winners and losers. Babcock had one outstanding performer, but the resulting careful timing release coincided with NATO’s pledge to promote defence spending.
Babcock surged to the top of the FTSE 100 leaderboard, hiking dividends behind the sharp rise in operating profits after defense contractors announced a very strong set of preliminary results.
Investors are also encouraged by commentary on plans to increase defense spending, some of which flows into Babcock’s financial resources.
“Stock in defense and engineering contractor Babcock has more than doubled to date, so investors needed positive results to maintain their enthusiasm,” said Russ Mold, investment director at AJ Bell.
“That’s mostly what they got. The numbers themselves were strong, but as the company said about the ‘new era of defense,’ the rhetoric that comes with it was. A meaningful increase in medium-term guidance will not be hurt either.
“Babcock, which plays an important role in supporting the UK’s nuclear submarine program, has announced an 11% increase in revenue and an eye-catching 50% increase in operating profit.
WPP was the top foray on the FTSE 100 after Barclays analysts reduced their stock to low weight.
